Forex Trading Articles

FOREX TRADING is without a doubt one of the most powerful vehicles for creating wealth. Significant returns are possible (often in very short time frames) due to the incredible leverage and liquidity that this unique market provides. However, with this potential large reward comes significant risk that must be carefully managed in order to both become and remain consistently profitable. To quote someone who is arguably the most successful forex trader in history…

“It’s not about being right or wrong, rather it’s about how much money you make when you’re right and how much you don’t lose when you’re wrong.”– George Soros

So what is the key to becoming a profitable foreign exchange trader i.e. making considerably more money than you lose over the long-term? First and foremost you need a rock solid forex trading education about what the foreign exchange market it is, how it works, who the players are and how you as a retail trader can participate safely and profitably. That is the purpose of this website – to cut your learning curve by educating you with ‘hard won’ knowledge (you never stop learning by the way) and arming you with the necessary tools to get you on the fast-track to forex trading success.

Benefits of Trading the Foreign Exchange Market

Size of the market

When looking at the advantages of any market, its size is a leading factor. With over $3 trillion changing hands on a daily basis, the Forex Market is the biggest in the world. This makes buying and selling currencies extremely easy because of the amount of buyer and seller participation. Along with the size of the market is the limitation for it to be manipulated and therefore you can be assured as one can be that you’ll receive a fair price.

Simplicity

The simplicity and basic ease of trading the foreign exchange market can make the profit potential rather easy. If you think a currency is going to increase in value, you buy and if you think the value of a currency is going to decrease you sell.

Low cost of entry

One might think that getting started as a currency trader would cost much money. The fact is it doesn’t. Online forex firms now offer ‘mini’ trading accounts with a minimum account deposit of only $200-$500 with no commission trading. This makes Forex much more accessible to the average individual, without large, start-up capital.

No intermediaries

The stock markets are comprised up of a number of centralised exchanges. One of the problems with any centralised exchange is the involvement of intermediaries. Any party located between the trader and the buyer and the seller of the security or instrument traded presents additional costs. The cost can be either in time or in fees. Spot currency trading does away with the intermediaries and allows clients to interact directly with the market maker. Forex traders get quicker access and cheaper transaction costs.

Flexibility

Flexibility is perhaps the most important benefit behind forex online day trading. Unlike organised exchanges such as the New York or London Stock Exchanges, forex trading is organised as an over-the-counter market. What this means is that the foreign exchange market does not occupy a physical building at a fixed location. Rather, traders are connected via the internet, through desktop computers and laptops as well as handheld devices, such as smartphones and tablets.

High degree of leverage

Just like futures contracts on commodities, such as oil or gold, forex trading offers a high degree of leverage. Some forex firms offer as 500: 1 leverage which means that a mere $2,000 deposit can enable you to buy or sell up to a $1,000,000 worth of currency. No other financial market on the planet offers that kind of leverage!

Profit in a rising or falling market

One of the most exciting advantages of FX trading is the ability to generate profits regardless of whether a currency pair is up or down. A currency trader can profit by taking a ‘long’ position (buy a currency pair and then selling it later at a higher price) or by taking a ‘short’ position (selling a currency pair and then buying it back at a lower price).

For example, if you think that the U.S Dollar will increase vs the Japanese Yen then you will buy U.S. Dollars and sell Japanese Yen (go long). On the other hand, if you think that the Japanese Yen will increase vs the U.S. Dollar you will sell U.S Dollars and buy Japanese Yen (go short). As long as you are correct on the direction, the potential for a profitable trade always exists, even if the trade goes against you by a small margin initially.

Guaranteed entry and exit prices

You have the ability in the foreign exchange market to determine at exactly which price you would like to enter a trade and at exactly which price you would like to exit a trade and these prices are guaranteed. Guaranteed stops (exit price) allow you to specify exactly how much you are willing to risk. Even though you are using great leverage, you still have the power to get out of a trade at any price you wish.

No forced market stops

Transactions were carried out even on September 11th, 2001 while many other major financial exchanges were closed.

A true 24-hour market

You can trade currencies 24 hours per day 5 1/2 days per week. The market is closed for 1 and 1/2 days over the weekend. Most other markets are open during standard business hours (e.g. 8am – 4pm or 9am – 5pm, or something similar).

No commissions required on trades

In Forex, there are no broker commissions. This fact alone can improve the profitability of any trading system. You won’t have to overcome the commission to gain a profit, you have to just overcome the spread, which in the case of the most popular currency pair, the EURUSD can be as little as 1 pip or even less. With most other trading instruments you are required to overcome the spread as well as pay a commission on entry and exit.

Without commissions in forex, it means that your forex trading is scalable. If you want to try out a new forex trading system with small trades, you can do so and be profitable. On the other side of the equation, you can keep compounding your profits, so you can keep increasing the size of your returns over time. This is one of the huge advantages for those who trade forex. This does not represent a problem in getting in or out of trades because of the high liquidity in forex.

Forex Trading Secrets Revealed

The number one secret to success when it comes to consistently profitable currency trading is education. Success in forex trading is only possible with financial intelligence and mastery over your trading psychology.

This website contains a growing number of highly informative and useful articles that will serve as the building blocks of your currency trading knowledge. You’ll learn forex trading basics right through to advanced forex strategies including how to put together your own forex trading system (such as the breakthrough that gives you a real edge in the market (i.e. produces consistently accurate forex trading signals). You’ll also find reviews of various tools and resources (including powerful forex platforms) that can significantly increase your chances of success and profitability.

There is a lot of information here for both beginner and seasoned forex traders alike. Take your time. Becoming successful at forex trading takes considerable time and effort. Mastery comes at a price (not the least of which is patience) as any truly successful currency trader will tell you. There’s a lot to learn, understand and practice and you constantly have to work at it, especially as this market is always changing / evolving. You will not make a fortune overnight, however if you stick with it, master the fundamentals, put in the ‘screen time’ (i.e. studying forex charts and price action) and most importantly diligently protect your trading capital with effective money management strategies, you just may survive long enough to reap the incredible financial rewards so often touted, yet not often realized in this global forex trading game.

Seek and Succeed!

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High Risk Warning:Foreign exchange carries a significantly high level of risk and may not be suitable for all investors. Prior to trading foreign exchange you should weigh carefully your investment goals, experience level, and appetite for risk. The very real possibility exists that you could lose some or all of your initial investment (or more) and therefore you should not invest money that you can't afford to lose. Forex trading should only be attempted with 'risk capital'. It is highly recommended that you first seek the advice of a qualified financial advisor (with expert knowledge and experience in trading forex) so that you may fully understand the risks involved and can make an informed decision as to whether or not forex trading is appropriate for you. If you decide to proceed with forex trading it is highly recommended that you 'virtual trade' (paper trade) using a demo account for at least several months until you have proven yourself to be profitable before moving onto live trading with real money. Trade safely. Trade responsibly.